The Sanitation Districts of Orange County are demanding that Orange County immediately return $9.2 million in investment proceeds that sanitation officials maintain were held in a separate fund, and not in the county's now-bankrupt investment pool.

Sanitation officials, in a recent letter to county supervisors, contend that the $9.2 million was generated by the sale of $100 million in securities owned by the districts. Sanitation officials allege that Smith Barney, Harris, Upham & Co., a Wall Street brokerage firm, sold the securities without authorization Dec. 8. They maintain that sale proceeds belong to the districts because the securities weren't held through the now-bankrupt pool.

But county bankruptcy attorney Bruce Bennett said Thursday that "there was no separate account." Bennett said that, despite what former Treasurer-Tax Collector Robert L. Citron told sanitation district officials, their funds were indeed tied up in the commingled pool because the $100 million in securities was pledged as collateral in other pool transactions.

To bolster their case with the county, sanitation officials submitted letters from Citron that promised to hold the sanitation district's funds in a separate account. In one letter, Citron pledged that "we will purchase the (securities) and make a specific investment for the Orange County Sanitation Districts away from the commingled pools."

In that letter, Citron said that investment proceeds would be paid directly to the districts, not the commingled pool.